TOKYO: Japanese government bonds rose on Monday as market players took their cues from rallies in US Treasuries and Bunds, but gains were limited with investors reluctant to chase yields lower ahead of two auctions this week.
December JGB futures were up 0.17 point at 142.68 on Monday. They rose to as high as 142.75, recovering above their five-day moving average around 142.70 for the first-time in three days, but well below a 10-month peak of 143.07 hit last week.
Bunds climbed to record highs on Friday after the resignation of a top German European Central Bank board member cast further doubt on Europe's ability to tackle its worsening sovereign debt crisis.
The yield on US 10-year notes on Friday marked its lowest since at least World War Two.
"JGB yields are already taking bad factors into account and investors are waiting for more developments in Europe," said a fund manager at a Japanese asset management firm.
"Compared with yield declines in Treasuries, drops in JGB yields have been limited because fiscal expansion in Japan is seen as a certainty."
On the supply front, 1.1 trillion yen ($14.1 billion) of 20-year JGBs will be offered on Tuesday, with a 600 billion yen liquidity-enhancing sale on Thursday.
The 10-year JGB yield was down 1 basis point at 0.990 percent, staying near 1 percent.
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